-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SBfGu8Dpbe4x13AbnvAHJMFFDyh0Rnq/jwuekteRSuUB/yBHB/eLfe/w4Ws5H/Y2 x4yNDnPxJlKrrVmv2TBX0w== 0001140361-09-005384.txt : 20090227 0001140361-09-005384.hdr.sgml : 20090227 20090227170009 ACCESSION NUMBER: 0001140361-09-005384 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20090227 DATE AS OF CHANGE: 20090227 GROUP MEMBERS: KIRKFIELD, L.L.C. GROUP MEMBERS: NEW RIVER MANAGEMENT V, LP GROUP MEMBERS: RJK, L.L.C. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CLINICAL DATA INC CENTRAL INDEX KEY: 0000716646 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 042573920 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-39041 FILM NUMBER: 09643958 BUSINESS ADDRESS: STREET 1: ONE GATEWAY CENTER STREET 2: SUITE 702 CITY: NEWTON STATE: MA ZIP: 02458 BUSINESS PHONE: 6175279933 MAIL ADDRESS: STREET 1: ONE GATEWAY CENTER STREET 2: SUITE 702 CITY: NEWTON STATE: MA ZIP: 02458 FORMER COMPANY: FORMER CONFORMED NAME: NOVITRON INTERNATIONAL INC DATE OF NAME CHANGE: 19940727 FORMER COMPANY: FORMER CONFORMED NAME: CLINICAL DATA INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KIRK RANDAL J CENTRAL INDEX KEY: 0001091823 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: THIRD SECURITY LLC STREET 2: THE GOVERNOR TYLER CITY: RADFORD STATE: VA ZIP: 24141 BUSINESS PHONE: 540-633-7900 MAIL ADDRESS: STREET 1: 1881 GROVE AVENUE CITY: RADFORD STATE: VA ZIP: 24141 SC 13D/A 1 formsc13da.htm CLINICAL DATA SC 13D/A 2-25-2009 formsc13da.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 22)
 
CLINICAL DATA, INC.
(Name of Issuer)
 
COMMON STOCK, $.01 par value per share
(Title of Class of Securities)
 
18725U109
(CUSIP Number)
 
Third Security, LLC
The Governor Tyler
1881 Grove Avenue
Radford, Virginia 24141
Attention:  Marcus E. Smith, Esq.
Telephone No.:  540-633-7971
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
 
Copy to:
John Owen Gwathmey, Esq.
David I. Meyers, Esq.
Troutman Sanders LLP
Troutman Sanders Building
1001 Haxall Point
Richmond, Virginia 23219
 
February 25, 2009
(Date of Event Which Requires Filing of This Statement)
 
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), (f) or (g),
check the following box £
 


 
Page 1 of 10 Pages

 
.
1
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Randal J. Kirk
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)     ¨
(b)     þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
PF
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
United States
 
NUMBER OF
7
SOLE VOTING POWER
2,505,576
 
SHARES
BENEFICIALLY
8
SHARED VOTING POWER
15,340,167
 
OWNED BY
EACH REPORTING
9
SOLE DISPOSITIVE POWER
2,505,576
 
PERSON WITH
10
SHARED DISPOSITIVE POWER
15,340,167
 
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,845,743
 
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.3%
 
14
TYPE OF REPORTING PERSON
IN
 

 

 
 
1
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
 
 
RJK, L.L.C.
I.R.S. Identification No.: 54-1816015
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)     ¨
(b)    þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
WC
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
 
NUMBER OF
7
SOLE VOTING POWER
0
 
SHARES
BENEFICIALLY
8
SHARED VOTING POWER
4,151,924
 
OWNED BY
EACH REPORTING
9
SOLE DISPOSITIVE POWER
0
 
PERSON WITH
10
SHARED DISPOSITIVE POWER
4,151,924
 
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,151,924
 
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.3%
 
14
TYPE OF REPORTING PERSON
OO – limited liability company
 

 

 
 
1
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
 
 
Kirkfield, L.L.C.
I.R.S. Identification No.: 54-1725089
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)     ¨
(b)    þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
WC
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
 
NUMBER OF
7
SOLE VOTING POWER
0
 
SHARES
BENEFICIALLY
8
SHARED VOTING POWER
1,929,705
 
OWNED BY
EACH REPORTING
9
SOLE DISPOSITIVE POWER
0
 
PERSON WITH
10
SHARED DISPOSITIVE POWER
1,929,705
 
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,929,705
 
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.5%
 
14
TYPE OF REPORTING PERSON
OO – limited liability company
 

 

 
 
1
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
 
 
New River Management V, LP
I.R.S. Identification No.: 56-2652938
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)     ¨
(b)     þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
WC
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
 
NUMBER OF
7
SOLE VOTING POWER
0
 
SHARES
BENEFICIALLY
8
SHARED VOTING POWER
6,436,285
 
OWNED BY
EACH REPORTING
9
SOLE DISPOSITIVE POWER
0
 
PERSON WITH
10
SHARED DISPOSITIVE POWER
6,436,285
 
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,436,285
 
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.4%
 
14
TYPE OF REPORTING PERSON
OO – limited partnership
 

 
Page 5 of 10 Pages

 

This Amendment No. 22 (the “Amendment”) amends and supplements the Statement on Schedule 13D, dated November 26, 1999 and filed on December 6, 1999, as amended by Amendment No. 1 dated March 10, 2000 and filed on March 15, 2000, Amendment No. 2 dated June 8, 2000 and filed on June 9, 2000, Amendment No. 3 dated December 31, 2000 and filed on January 8, 2001, Amendment No. 4 dated February 7, 2001 and filed on March 1, 2001, Amendment No. 5 dated June 6, 2001 and filed on June 8, 2001, Amendment No. 6 dated June 25, 2001 and filed on June 26, 2001, Amendment No. 7 dated September 6, 2001 and filed on September 7, 2001, Amendment No. 8 dated October 23, 2001 and filed on October 26, 2001, Amendment No. 9 dated October 26, 2001 and filed on October 30, 2001, Amendment No. 10 dated August 21, 2002 and filed on August 21, 2002, Amendment No. 11 dated April 29, 2003 and filed on May 2, 2003, Amendment No. 12 dated November 10, 2003 and filed on November 14, 2003, Amendment No. 13 dated June 20, 2005 and filed on June 27, 2005, Amendment No. 14 dated November 17, 2005 and filed on November 23, 2005, Amendment No. 15 dated February 9, 2006 and filed on February 15, 2006, Amendment No. 16 dated May 18, 2006 and filed on May 23, 2006, Amendment No. 17 dated June 13, 2006 and filed on June 15, 2006, Amendment No. 18 dated September 13, 2006 and filed on September 22, 2006, Amendment No. 19 dated February 26, 2007 and filed on February 27, 2007, Amendment No. 20 dated July 17, 2007 and filed on July 20, 2007, and Amendment No. 21 dated September 26, 2008 and filed on September 30, 2008 (as amended, the “Original Schedule 13D”), relating to the Common Stock, par value $.01 per share (the “Common Stock”), of Clinical Data, Inc., a Delaware corporation (the “Issuer”).  Mr. Randal J. Kirk (“Mr. Kirk”), RJK, L.L.C., a Virginia limited liability company (“RJK”), Kirkfield, L.L.C., a Virginia limited liability company (“Kirkfield”), and New River Management V, LP, a Delaware limited partnership (“NRM V” and, together with Mr. Kirk, RJK and Kirkfield, the “Reporting Persons”), are filing this Amendment to disclose the acquisition by RJK and NRM V of an aggregate of $50 million in debt securities convertible into shares of Common Stock of the Issuer in a private placement by the Issuer on February 25, 2009 (the “Offering”).  As described in this Amendment, some of the Common Stock that is beneficially owned by Mr. Kirk is directly beneficially owned by one of the following entities, each of which is controlled by Mr. Kirk: RJK, Kirkfield, Randal J Kirk (2000) Limited Partnership, a Delaware limited partnership (“RJK 2000”), Third Security Staff 2001 LLC, a Virginia limited liability company (“Staff 2001”), Third Security Senior Staff 2008 LLC, a Virginia limited liability company (“Senior Staff 2008”), Third Security Staff 2008 LLC, a Virginia limited liability company (“Staff 2008”), Third Security Incentive 2008 LLC, a Virginia limited liability company (“Incentive 2008”), New River Management II, LP, a Virginia limited partnership (“NRM II”), New River Management III, LP, a Virginia limited partnership (“NRM III”), NRM V and Zhong Mei, L.L.C., a Virginia limited liability company (“Zhong Mei”).
 
Except as set forth below, there are no changes to the information set forth in the Original Schedule 13D.
 
 
Item 3.
Source and Amount of Funds or Other Consideration.
 
Item 3 of the Original Schedule 13D is hereby amended and supplemented as follows:
 
On February 25, 2009, RJK and NRM V each invested $25 million of cash on hand to purchase $50 million in debt securities convertible into shares of Common Stock in the Offering.  Each of RJK and NRM V has the right to convert such debt securities into Common Stock at any time in its discretion at a conversion price of $8.1825 per share, which reflects the closing price of the Common Stock on February 25, 2009 of $8.12 plus $0.0625 per share.  All interest on the debt securities is payable in cash.  The debt securities are convertible by RJK and NRM V into an aggregate of 6,110,600 shares of Common Stock.  The form of convertible note is filed herewith as Exhibit 4.1.

 
Page 6 of 10 Pages

 

Item 5.
Interest in Securities of the Issuer.

Item 5(a) of the Original Schedule 13D is hereby amended and restated to read in its entirety as follows:
 
“The aggregate number and percentage of shares of Common Stock to which this statement relates is 17,845,743 shares, representing 60.3% of the 29,610,317 shares outstanding as of the date of this report, based upon the number of shares disclosed by the Issuer as of February 6, 2009 in the Issuer’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (the most recent available filing by the Issuer with the Securities and Exchange Commission) and taking into account the 6,110,600 shares issuable upon conversion of the convertible debt securities issued in the Offering and 757,461 shares issuable upon exercise of warrants issued in connection with a private placement by the Issuer in September 2008 that become exercisable within 60 days of the date hereof.  Mr. Kirk directly beneficially owns 2,505,576 of the shares to which this report relates.  The remaining 15,340,167 shares of Common Stock to which this statement relates are directly beneficially owned as follows:
 
Owner
 
Shares
 
Kirkfield
    1,929,705  
RJK
    4,151,924  
RJK 2000
    363,582  
Zhong Mei
    244,369  
NRM II
    1,049,877  
NRM III
    290,014  
NRM V
    6,436,285  
Staff 2001
    692,617  
Senior Staff 2008
    72,717  
Staff 2008
    72,717  
Incentive 2008
    36,360  
 
Mr. Kirk could be deemed to have indirect beneficial ownership of the shares directly beneficially owned by Kirkfield, RJK, RJK 2000, Zhong Mei, NRM II, NRM III, NRM V, Staff 2001, Senior Staff 2008, Staff 2008 and Incentive 2008.”
 
Item 5(c) of the Original Schedule 13D is hereby amended and supplemented as follows:
 
“Other than the purchase of debt securities convertible into shares of Common Stock in the Offering as reported herein, the Reporting Persons have not engaged in any other transactions involving the shares of Common Stock since the filing of Amendment No. 21 with the Securities and Exchange Commission on September 30, 2008.”
 
Page 7 of 10 Pages


Item 6.            Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 of the Original Schedule 13D is hereby amended and supplemented as follows:
 
“In connection with the purchase in the private placement of the convertible debt securities, the Issuer issued 1,527,650 and 1,527,650 warrants to RJK and NRM V, respectively, in two equal tranches.  The exercise price of the first tranche of warrants is $8.12, equaling the closing bid price of the Common Stock on the Nasdaq Stock Market on February 25, 2009.  The exercise price of the second tranche of warrants is $9.744, equaling a 20% premium to the closing bid price of the Common Stock on the Nasdaq Stock Market on February 25, 2009.  The warrants are exercisable at any time six months after February 25, 2009 through the close of business on the fifth year anniversary of the date on which the warrants initially become exercisable.  The form of Common Stock Purchase Warrant is filed herewith as Exhibit 4.2.  The Issuer has granted to the holders certain registration rights with respect to the shares issuable upon conversion of the debt securities and exercise of the warrants.  Except as otherwise described in this statement, to the best knowledge of any of the Reporting Persons, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2, or between such persons and any other person, with respect to any securities of the Issuer, including, but not limited to, transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.”
 
 
Item 7.
Material to be Filed as Exhibits.
 
The following documents are being filed as exhibits to this Amendment and are incorporated herein by reference:
 
Exhibit 4.1
Form of Convertible Note
 
Exhibit 4.2 
Form of Common Stock Purchase Warrant
 
Exhibit 99.1
Joint Filing Agreement, dated as of February 27, 2009, by and among Randal J. Kirk, RJK, L.L.C., Kirkfield, L.L.C. and New River Management V, LP

 
Page 8 of 10 Pages

 
 
SIGNATURE
 
After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.
 


Date:  February 27, 2009
/s/ Randal J. Kirk
  Randal J. Kirk
     
Date:  February 27, 2009
RJK, L.L.C.
     
 
By:
Third Security, LLC, its managing member
     
 
By:
/s/ Randal J. Kirk
   
Randal J. Kirk
   
Manager
     
Date:  February 27, 2009
KIRKFIELD, L.L.C.
     
 
By:
Third Security, LLC, its managing member
     
 
By:
/s/ Randal J. Kirk
   
Randal J. Kirk
   
Manager
     
Date:  February 27, 2009
NEW RIVER MANAGEMENT V, LP
     
 
By:
Third Security Capital Partners V, LLC, its general partner
     
 
By:
Third Security, LLC, its managing member
     
 
By:
/s/ Randal J. Kirk
   
Randal J. Kirk
   
Manager

 
Page 9 of 10 Pages

 

EXHIBIT INDEX
 
Exhibit Number
Exhibit
   
Form of Convertible Note
   
Form of Common Stock Purchase Warrant
   
Joint Filing Agreement, dated as of February 27, 2009, by and among Randal J. Kirk, RJK, L.L.C., Kirkfield, L.L.C. and New River Management V, LP
 

10 of 10 Pages

EX-4.1 2 ex4_1.htm EXHIBIT 4.1 ex4_1.htm

Exhibit 4.1
 
 
CONVERTIBLE NOTE
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.  ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 4(c)(iii) AND SECTION 15(a) HEREOF.  THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 4(c)(iii) OF THIS NOTE.
 
CLINICAL DATA, INC.
 
Convertible Note
 
Issuance Date:  February 25, 2009
Original Principal Amount: U.S. $25,000,000

FOR VALUE RECEIVED, Clinical Data, Inc., a Delaware corporation (the “Company”), hereby promises to pay to ______________________ or registered assigns (“Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon an Interest Date (as defined below) or the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).  This Convertible Note (including all Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Convertible Notes issued pursuant to the Securities Purchase Agreement on the Closing Date (collectively, the “Notes” and such other Convertible Notes, the “Other Notes”).  Certain capitalized terms used herein are defined in Section 24.
 
 

 
 
1.              PAYMENTS OF PRINCIPAL.  On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest on such Principal.  The “Maturity Date” shall be February 25, 2017.  Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal or accrued and unpaid Interest.
 
2.              PREPAYMENT OF PRINCIPAL.  At any time (a) on or before the second anniversary of the Issuance Date upon receipt of the written consent of the Required Holders (which consent may be withheld, conditioned or delayed at the sole discretion of the Required Holders), or (b) after the second anniversary of the Issuance Date upon not less than 90 days’ prior written notice to the Holder (which notice may by given by the Company not more than 89 days prior to the second anniversary) and all of the other holders of the Notes, in either such case, the Company shall have the right to prepay, without penalty or premium, all or any portion (in multiples of not less than $100,000 or the amount outstanding under this Note) of this Note and the Other Notes; provided, however, the Holder shall retain conversion rights in respect of this Note during such notice period; provided further that any such prepayment of the Notes shall be pro rata with respect to the then-outstanding principal balances of the Notes.  If, after providing the 90-day notice to the Holder, the Holder notifies the Company during such 90-day period that the Holder intends to convert all or a portion of this Note to Conversion Shares, the Company shall not thereafter be permitted to prepay the portion of the Note to be so converted, regardless of whether there is a delay in the conversion of such portion of this Note as a result of any filing required under the HSR Act (as defined herein).
 
3.              INTEREST; INTEREST RATE.
 
(a)           Payment of Interest.  Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 365-day year and the actual number of days elapsed and shall be payable in arrears on each yearly anniversary of the Issuance Date, including the Maturity Date (each, an “Interest Date”) with the first Interest Date being February 25, 2010.  Interest shall be payable on each Interest Date, to the record holder of this Note on such Interest Date, in cash (“Cash Interest”).  Cash Interest shall be paid to the Holder pursuant to Section 20(b).
 
(b)           Default Interest.  From and after the occurrence and during the continuance of an Event of Default, the Interest Rate shall be increased to 17.72% per annum.  In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided, however, that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of cure of such Event of Default.  
 
4.              CONVERSION OF NOTES.  This Note shall be convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), on the terms and conditions set forth in this Section 4.
 
(a)           Conversion Right.  Subject to the provisions of Section 4(c)(ii), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(c), at the Conversion Rate (as defined below).  The Company shall not issue any fraction of a share of Common Stock upon any conversion.  If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock down to the nearest whole share and shall pay the Holder cash in lieu of such fractional share.  The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of the issuance and delivery of Common Stock to any Person other than the Holder or with respect to any income tax due by the Holder with respect to such Common Stock.
 
 
2

 
 
(b)           Conversion Rate.  The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
 
(i)           “Conversion Amount” means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made.
 
(ii)           “Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination, $8.1825, subject to adjustment as provided herein.
 
(c)           Mechanics of Conversion.
 
(i)           Optional Conversion.  To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York City time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section 4(c)(iii), surrender this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction).  Accrued and unpaid Interest on any Conversion Amount being converted up to and including the Conversion Date shall be payable to the record holder of this Note on the Share Delivery Date (as defined below) as Cash Interest.  On or before the first Business Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic mail a confirmation (the “Conversion Confirmation”) of receipt of such Conversion Notice to the Holder and the Company’s Transfer Agent.  Any Conversion Confirmation delivered by the Company shall confirm that any accrued and unpaid Interest on such Conversion Amount up to and including the Conversion Date shall be paid on the Share Delivery Date as Cash Interest.  On or before the third Business Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall pay to the Holder in cash an amount equal to the accrued and unpaid Interest on the Conversion Amount up to and including the Conversion Date.  If this Note is physically surrendered for conversion as required by Section 4(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal not converted.  The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
 
 
3

 
 
(ii)           Company’s Failure to Timely Convert.  If the Company fails to deliver the required number of shares of Common Stock in certificated form to which the Holder is entitled upon conversion of any Conversion Amount on or prior to the date which is three Trading Days after the Conversion Date other than pursuant to limitations in Section 4(c) hereof (a “Conversion Failure”), and if after the Conversion Date and prior to the receipt of such shares of Common Stock in certificated form, the Holder purchases in a bona fide arm’s length transaction for fair market value (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the shares of Common Stock issuable upon such conversion that the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Common Stock that the Company was required to deliver to the Holder in connection with the Conversion Amount at issue by (B) the Conversion Price.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.
 
(iii)           Registration; Book-Entry.  The Company shall maintain a register (the “Register”) for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered Notes”).  The entries in the Register shall be conclusive and binding for all purposes absent manifest error.  The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of principal and interest hereunder, notwithstanding notice to the contrary.  A Registered Note may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register.  Upon its receipt of a request to assign or sell all or part of any Registered Note by a Holder, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 15.  Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Principal amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note.  The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.
 
5.             RIGHTS UPON EVENT OF DEFAULT.
 
(a)           Event of Default.  Each of the following events shall constitute an “Event of Default”:
 
 
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(i)           the failure of the Company to file the Registration Statement (as defined in the Registration Rights Agreement) on or prior to the Filing Date;
 
(ii)         the suspension from trading or failure of the Common Stock to be listed on an the Trading Market for a period of five consecutive Trading Days or for more than an aggregate of ten Trading Days in any 365-day period;
 
(iii)         the Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within ten Business Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including by way of public announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion of any Notes into shares of Common Stock that is tendered in accordance with the provisions of the Notes, other than pursuant to Section 4(c)(ii);
 
(iv)        the Company’s failure to pay to the Holder any amount of Principal, Redemption Price, Interest or other amounts when and as due under this Note or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failure to pay Interest and other amounts when and as due, in which case only if such failure continues for a period of at least five Business Days;
 
(v)         any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries which Indebtedness, individually or in the aggregate, exceeds $250,000, other than with respect to any Other Notes;
 
(vi)        any failure to timely pay, when due, trade payables of the Company or any of its Subsidiaries which trade payables, individually or in the aggregate, exceeds $250,000;
 
(vii)       the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;
 
(viii)      a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries for all or substantially all of its property or (C) orders the liquidation of the Company or any of its Subsidiaries and, in each case, such order or decree is not dismissed or stayed within 30 days of such entry;
 
(ix)         a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company or any of its Subsidiaries and which judgments are not, within 60 days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within 30 days of the issuance of such judgment;
 
 
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(x)          there is a material breach of a representation, warranty, covenant or other term or condition of the Company under any Transaction Document, except, in the case of a breach of a covenant or other term or condition which is curable, only if such breach continues for a period of at least ten consecutive Business Days; or
 
(xi)         the SEC commences a formal investigation or enforcement action of the Company and/or its Subsidiaries, or a formal investigation or enforcement action of any of the then current officers or directors of the Company that is related to the Company, its Subsidiaries and/or the Common Stock or enters a consent or other order against the Company and/or its Subsidiaries or any of the then current officers or directors of the Company that is related to the Company, its Subsidiaries and/or the Common Stock.
 
(b)           Redemption Right.  Upon the occurrence of an Event of Default, the Company shall within one Business Day deliver written notice thereof via facsimile and overnight courier (an “Event of Default Notice”) to the Holder.  At any time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem and, in the case the Holder has not received an Event of Default Notice, the Event of Default of which the Holder has become aware.  Each portion of this Note subject to redemption by the Company pursuant to this Section 5(b) shall be redeemed by the Company at a price equal to the greater of (i) the sum of the Conversion Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and (ii) the product of (A) the Conversion Rate with respect to such sum of the Conversion Amount together with accrued and unpaid Interest with respect to such Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice and (B) the greatest of (x) the Closing Bid Price of the Common Stock on the date immediately preceding such Event of Default, (y) the Closing Bid Price of the Common Stock on the date immediately after such Event of Default and (z) the Closing Bid Price of the Common Stock on the date the Holder delivers the Event of Default Redemption Notice (the “Event of Default Redemption Price”).  Redemptions required by this Section 5(b) shall be made in accordance with the provisions of Section 10.  To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
 
6.             RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
 
 
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(a)           Assumption.  The Company shall not enter into or be party to a Fundamental Transaction unless (i)  the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 6(a) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts and the interest rates of the Notes then outstanding held by such holder, having similar conversion rights and having similar ranking to the Notes, and satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market (a “Public Successor Entity”).  Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note with the same effect as if such Successor Entity had been named as the Company herein.  Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property) issuable upon the conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity), as adjusted in accordance with the provisions of this Note.  The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion or redemption of this Note.
 
(b)           Occurrence.  Upon the occurrence of a Fundamental Transaction, and any subsequent conversion of this Note, the Holder shall have the right to receive, for the Conversion Amount that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon conversion of this Note, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Note as determined in accordance with the Black-Scholes option pricing formula.  For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new note consistent with the foregoing provisions and evidencing the Holder’s right to convert such note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 6 and ensuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
 
 
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(c)            Redemption Right.  Not later than 30 days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Change of Control Notice”).  At any time during the period beginning after the Holder’s receipt of a Change of Control Notice and ending 20 Trading Days after the date of the consummation of such Change of Control, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem.  The portion of this Note subject to redemption pursuant to this Section 6 shall be redeemed by the Company in cash at a price equal to the greater of (i) the sum of (A) the Conversion Amount being redeemed and (B) the amount of any accrued but unpaid Interest on such Conversion Amount being redeemed through the date of such redemption payment and (ii) the sum of (A) the product of (x) the Conversion Amount being redeemed multiplied by (y) the quotient determined by dividing (I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per Common Share to be paid to the holders of the Common Shares upon consummation of the Change of Control (any such non-cash consideration consisting of marketable securities to be valued at the higher of the Closing Bid Price of such securities as of the Trading Day immediately prior to, the Closing Bid Price as of the Trading Day immediately following the public announcement of such proposed Change of Control and the Closing Bid Price of the Common Stock immediately prior to the public announcement of such proposed Change of Control) by (II) the Conversion Price plus (B) the amount of any accrued but unpaid Interest on such Conversion Amount being redeemed through the date of such redemption payment (the “Change of Control Redemption Price”).  Redemptions required by this Section 6 shall be made in accordance with the provisions of Section 10 and shall have priority to payments to stockholders in connection with a Change of Control.  To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments.  Notwithstanding anything to the contrary in this Section 6, until the Change of Control Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 6(c) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 4.
 
7.             CERTAIN ADJUSTMENTS.
 
(a)           Stock Dividends and Splits.  If the Company, at any time on or after the Subscription Date: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon conversion of this Note shall be proportionately adjusted.  Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
 
 
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(b)           Other Events.  If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Note; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 7.
 
8.             NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.
 
9.             RESERVATION OF AUTHORIZED SHARES.
 
(a)           Reservation.  Commencing on or before the Issuance Date, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance under each of the Notes, no less than, 100% of the number of shares of Common Stock issuable (i) as Conversion Shares upon conversion of the Notes and (ii) as Warrant Shares upon exercise of the Warrants then outstanding (without taking into account any limitations on the conversion of the Notes or exercise of the Warrants set forth in the Notes and Warrants, respectively).
 
(b)           Insufficient Authorized Shares.  If at any time while any of the Notes remains outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.
 
 
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10.           HOLDER’S REDEMPTIONS.
 
(a)           Mechanics.  The Company shall deliver the applicable Redemption Price to the Holder within five Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice.  If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 6(c), the Company shall deliver the applicable Redemption Price to the Holder concurrently with the consummation of such Change of Control if such notice is received at least one Business Day prior to the consummation of such Change of Control and within five Business Days after the Company’s receipt of such notice otherwise.  In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal which has not been redeemed.  In the event that the Company does not pay the applicable Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price has not been paid.  Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, and (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 15(d)) to the Holder representing the sum of such Conversion Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount.
 
(b)           Redemption by Other Holders.  Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 5(b) or Section 6(b) (each, an “Other Redemption Notice”), the Company shall immediately, but no later than one Business Day of its receipt thereof, forward to the Holder by facsimile a copy of such notice.  If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven Business Day period beginning on and including the date which is three Business Days prior to the Company’s receipt of the Holder’s Redemption Notice and ending on and including the date which is three Business Days after the Company’s receipt of the Holder’s Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven Business Day period.
 
 
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11.           VOTING RIGHTS.  The Holder shall have no voting rights as the holder of this Note, except as required by law, including, but not limited to, the Delaware General Corporation Law, and as expressly provided in this Note.
 
12.           COVENANTS.  So long as this Note is outstanding:
 
(a)           Rank.  All payments due under this Note shall rank pari passu with all Other Notes and, without the written consent of the Required Holders, no other Indebtedness (other than Permitted Indebtedness) of the Company and its Subsidiaries shall be senior to the Indebtedness of the Company and its Subsidiaries evidenced by this Note and the Other Notes.
 
(b)           Use of Proceeds. The Company will use the proceeds from the sale of the Notes substantially as set forth on Schedule 5(d) to the Securities Purchase Agreement.
 
(c)           HSR Filing.  If, prior to any proposed issuance of Conversion Shares to the Holder upon conversion of this Note (including any issuance pursuant to the last sentence of Section 2), it is determined by the Company or the Holder that such issuance would require the filing of a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), with the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, then the Company shall (i) cooperate fully with the Holder and its Affiliates with respect to completing such filing as soon as practicable, (ii) respond as promptly as practicable to any inquiries received from the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice for additional information or documentation and to all inquiries and requests received from any State Attorney General or other governmental authority in connection with antitrust matters, and (iii) not extend any waiting period under the HSR Act or enter into any other agreement with the U.S. Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice with respect to the transaction contemplated by such filing without the prior written consent of the Holder.  Each of the Company and the Holder shall be responsible for, and shall pay the amount of, any filing fee required to be paid by it under the HSR Act.
 
(d)           Incurrence of Indebtedness.  So long as this Note or any Other Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness, other than the Indebtedness evidenced by this Note and the Other Notes or Permitted Indebtedness.
 
(e)           Restriction on Redemption and Cash Dividends.  So long as this Note or any Other Note is outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or cash distribution on, the Common Stock of the Company without the prior express written consent of the Required Holders.
 
(f)           Additional Notes; Variable Securities; Dilutive Issuances.  For long as any Notes or Warrants remain outstanding, the Company shall not, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which is less than the then market price of the Common Stock, including by way of one or more reset(s) to any fixed price, other than in connection with an underwritten public offering.  For purposes of clarification, this section does not prohibit the issuance of securities with customary “weighted average” or “full ratchet” anti-dilution adjustments that adjust the fixed conversion or exercise price of securities sold by the Company in the future.
 
 
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13.           VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES.  The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for any change or amendment to this Note or the Other Notes.  In no event shall any amendment, modification or waiver be made to this Note which would adversely effect the Holder without the written consent of the Holder.
 
14.           TRANSFER.  This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 7 of the Securities Purchase Agreement.
 
15.           REISSUANCE OF THIS NOTE.
 
(a)           Transfer.  If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 15(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Section 15(d)) to the Holder representing the outstanding Principal not being transferred.  The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(b)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
 
(b)           Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal.
 
(c)           Note Exchangeable for Different Denominations.  This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 15(d) and in principal amounts of at least $100,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
 
 
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(d)           Issuance of New Notes.  Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 15(a) or Section 15(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest on the Principal and Interest of this Note, from the Issuance Date.
 
16.           REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note.  Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
 
17.           PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements.
 
18.           CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted by the Company and all the Holders of Notes and shall not be construed against any person as the drafter hereof.  The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.
 
19.           FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
 
 
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20.           NOTICES; PAYMENTS.
 
(a)           Notices.  Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 11(c) of the Securities Purchase Agreement.  The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.
 
(b)           Payments.  Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Holders of Notes, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement); provided, however, that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.  Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date.  
 
21.           CANCELLATION.  After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
 
22.           WAIVER OF NOTICE.  To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
 
23.           GOVERNING LAW.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof, and the forum, venue, jury waiver and other provisions of Section 11(h) of the Securities Purchase Agreement are hereby incorporated herein and made a part hereof.
 
24.           CERTAIN DEFINITIONS.  For purposes of this Note, the following terms shall have the following meanings:
 
(a)           “Bloomberg” means Bloomberg Financial Markets.
 
(b)           “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
 
 
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(c)           “Change of Control” means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.
 
(d)           “Closing Bid Price” means the closing consolidated bid price of the Common Stock as reported by NASDAQ’s Market Intelligence Desk as of 4:00 p.m. New York City time on the applicable payment date, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
 
(e)           “Closing Date” has the meaning ascribed to such term in the Securities Purchase Agreement which corresponds to the date this Note and the Other Notes were initially issued pursuant to the terms of the Securities Purchase Agreement.
 
(f)           “Effectiveness Date” has the meaning ascribed to such term in the Registration Rights Agreement.
 
(g)           “Eligible Market” means the Trading Market, The New York Stock Exchange, Inc., the American Stock Exchange, or The Nasdaq Capital Market, or any market that is a successor to any of the foregoing.
 
(h)           “Fundamental Transaction” means (i) any merger or consolidation of the Company with or into another Person, (ii) any sale of all or substantially all of the Company’s assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.
 
(i)           “Indebtedness” of any Person means, without duplication (i) (a) obligations created, issued or incurred for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person), (b) indebtedness of others secured by a lien on the property of the Company or any of its Subsidiaries, whether or not the respective indebtedness so secured has been assumed by the Company or any of its Subsidiaries, (c) obligations (contingent or otherwise) in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions, (d) obligations under repurchase agreements, sale/buy-back agreements or like arrangements, (e) indebtedness of others guaranteed by the Company or any of its Subsidiaries and (f) any other obligations that may be considered debt.
 
 
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(j)           “Interest Rate” means 9.72% per annum.  The Interest Rate shall be subject to adjustment as set forth in Section 3 hereof.
 
(k)           “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
 
(l)           “Permitted Indebtedness” means (i) Indebtedness set forth on Schedule 24(1) attached hereto, and any amendments, modifications or refinancing of such Indebtedness and (ii) any other Indebtedness, approved by the Board of Directors, in an aggregate amount of up to $2 million.
 
(m)           “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.
 
(n)           “Redemption Notices” means, collectively, the Event of Default Redemption Notice and the Change of Control Redemption Notice.
 
(o)           “Redemption Price” means the Event of Default Redemption Price or the Change of Control Redemption Price, as applicable.
 
(p)           “Registration Rights Agreement” means that certain Registration Rights Agreement dated as of the Subscription Date by and among the Company and the initial holders of the Notes.
 
(q)           “Required Holders” means the holders of Notes representing at least 50% of the aggregate principal amount of the Notes then outstanding.
 
(r)           “SEC” means the United States Securities and Exchange Commission.
 
(s)           “Securities Purchase Agreement” means that certain securities purchase agreement dated as of the Subscription Date by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes and Warrants.
 
(t)           “Subscription Date” means February 25, 2009.
 
 
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(u)           “Successor Entity” means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person’s Parent Entity.
 
(v)           “Trading Day” means any day on which the Common Stock is traded on the Trading Market, or, if the Trading Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided, however, that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York City time).
 
(w)           Trading Market” means the Nasdaq Global Market.
 
(x)           “Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants issued in exchange therefor or replacement thereof.
 
25.           DISCLOSURE.  Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries, the Company shall within one Business Day after any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.  In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
 
[Signature Page Follows]
 
 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
 

 
Clinical Data, Inc.
   
 
By:
 
   
Caesar J. Belbel
   
Executive Vice President, Chief Legal Officer and Secretary

 
Signature Page to Convertible Note

 
 

 

EXHIBIT I

CLINICAL DATA, INC.
CONVERSION NOTICE

Reference is made to the Clinical Data Convertible Note (the “Note”) issued to the undersigned by Clinical Data, Inc. (the “Company”).  In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.01 per share (the “Common Stock”) of the Company, as of the date specified below.
 
Date of Conversion:
 

Aggregate Conversion Amount to be converted:
 

Please confirm the following information:

Conversion Price:
 

Number of shares of Common Stock to be issued:
 

Please issue the Common Stock into which the Conversion Amount of the Note is being converted in the following name and to the following address:

Issue to:
 
   
   

Facsimile Number:
 

Authorization:
 

By:
 

Title:
 

Dated:
 

Account Number:
 
(if electronic book entry transfer)
   
Transaction Code Number:
 
(if electronic book entry transfer)

Installment Amount to be reduced and amount
 
of reduction for each Installment Date:
 

 
 

 

ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________ __, 2009 from the Company and acknowledged and agreed to by ___________________.
 

  CLINICAL DATA, INC.
     
     
 
By:
 
   
Name:
   
Title:
 
 

EX-4.2 3 ex4_2.htm EXHIBIT 4.2 ex4_2.htm

Exhibit 4.2
 
 
COMMON STOCK PURCHASE WARRANT (SERIES [_])
 
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 
COMMON STOCK PURCHASE WARRANT (SERIES [_])
Warrant No:  [_]-1

To Purchase 763,825 Shares of Common Stock of

CLINICAL DATA, INC.

THIS COMMON STOCK PURCHASE WARRANT (SERIES [_]) (the “Warrant”) certifies that, for value received, ____________________________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time six (6) months after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5th) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Clinical Data, Inc., a Delaware corporation (the “Company”), up to 763,825 shares (the “Warrant Shares”) of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”).  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
 
Section 1.              Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated February 25, 2009, among the Company and the purchasers signatory thereto.
 
Section 2.              Exercise.
 
(a)           Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within five (5) Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased in the manner described in clause (i) or (ii) below:
 
 
 

 
 
(i)           Cash Exercise.  Payment may be made in cash or by certified or official bank check payable to the order of the Company.
 
(ii)          Cashless Exercise.  In lieu of payment of the Exercise Price as provided in clause (i), the Holder may elect a cashless net exercise.  In the case of such cashless net exercise, the Holder shall surrender this Warrant for cancellation and receive in exchange therefore the full number of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock as is computed using the following formula:
 
X=Y*(A-B)
A
Where:
 
X=      the number of shares of Common Stock to be issued to the Holder upon cashless exercise of this Warrant
 
Y=      the total number of shares Common Stock covered by this Warrant which the Holder has surrendered at such time for cashless exercise (including both shares to be issued to the Holder upon cashless exercise of this Warrant and shares to be cancelled as payment therefore)
 
A=      the Current Market Value as of the business day on which the Holder surrenders this Warrant to the Company
 
B =     the Exercise Price then in effect under this Warrant at the time at which the Holder surrenders this Warrant to the Company
 
For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Common Stock issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Common Stock shall be deemed to have commenced, on the date this Warrant was originally issued.
 
For the purposes of the foregoing, the term “Current Market Value” shall mean the fair market value of the shares of Common Stock as determined as follows:
 
(x)          if the Common Stock is traded on a securities exchange or the Nasdaq Stock Market, the value shall be deemed to be the average of the closing prices of the Common Stock on such exchange or market over the five (5) trading day period ending three (3) days prior to the date of determination;
 
 
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(y)     if the Common Stock is actively traded over-the-counter, the value shall be deemed to be the average of the closing bid over the five (5) trading day period ending three (3) days prior to the date of determination; or
 
(z)      if there is no active public market for the Common Stock, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Company.
 
(b)           Exercise Price.  The per share exercise price of the Common Stock under this Warrant shall be [$8.12000 for Series A Warrants] [$9.74400 for Series B Warrants], subject to adjustment hereunder (the “Exercise Price”).
 
(c)           Mechanics of Exercise.
 
(i)           Authorization of Warrant Shares.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges imposed by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
 
(ii)         Delivery of Certificates Upon Exercise.  Certificates for Warrant Shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within five (5) Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”).  This Warrant shall be deemed to have been exercised on the date the Exercise Price and completed Notice of Exercise are received by the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(vi) prior to the issuance of such shares, have been paid.
 
(iii)        Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
 
(iv)        Rescission Rights.  If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(c) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise until such time as the Company causes its transfer agent to transmit such certificate or certificates.
 
 
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(v)         No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.
 
(vi)        Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
 
(vii)       Closing of Books.  The Company will not close its stockholder books or records prior to the Termination Date in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
 
(viii)      Buy-In.  In addition to the rights specified in clause (ii) above, if by the Warrant Share Delivery Date, the Company fails to deliver the required number of Warrant Shares in certificated form in the manner required pursuant to this Section 2(c), and if after the Warrant Share Delivery Date and prior to the receipt of such Warrant Shares in certificated form, the Holder purchases in a bona fide arm’s length transaction for fair market value (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the Exercise Price.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.
 
(d)           HSR Filing.  If, prior to any proposed issuance of Warrant Shares to the Holder upon exercise of this Warrant, it is determined by the Company or the Holder that such issuance would require the filing of a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), with the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, then the Company shall (i) cooperate fully with the Holder and its Affiliates with respect to completing such filing as soon as practicable, (ii) respond as promptly as practicable to any inquiries received from the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice for additional information or documentation and to all inquiries and requests received from any State Attorney General or other governmental authority in connection with antitrust matters, and (iii) not extend any waiting period under the HSR Act or enter into any other agreement with the U.S. Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice with respect to the transaction contemplated by such filing without the prior written consent of the Holder.  Each of the Company and the Holder shall be responsible for, and shall pay the amount of, any filing fee required to be paid by it under the HSR Act.
 
 
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Section 3.               Certain Adjustments.
 
(a)           Stock Dividends and Splits.  If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
 
(b)           Fundamental Transaction.  If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula.  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration.  The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(b) and ensuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
 
 
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(c)           Calculations.  All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 0, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
 
(d)           Voluntary Adjustment By Company.  The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
 
(e)           Notice to Holders.
 
(i)           Adjustment to Exercise Price.  Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.
 
(ii)           Notice to Allow Exercise by Holder.  If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least five (5) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to exercise this Warrant during the 5-day period commencing on the date of such notice to the effective date of the event triggering such notice.
 
 
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Section 4.               Transfer of Warrant.
 
(a)           Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 7 of the Purchase Agreement, after the Initial Exercise Date this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
 
(b)           New Warrants.  This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
 
 
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(c)           Warrant Register.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
 
(d)           Transfer Restrictions.  If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the 1933 Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the 1933 Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) promulgated under the 1933 Act or a qualified institutional buyer as defined in Rule 144A(a) under the 1933 Act.
 
Section 5.               Miscellaneous.
 
(a)           Title to Warrant.  Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed.  The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.
 
(b)           No Rights as Shareholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.
 
(c)           Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
 
 
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(d)           Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.
 
(e)           Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.
 
(f)           Further Assurances.  Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.  Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
 
(g)           Jurisdiction.  All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.
 
(h)           Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.
 
 
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(i)             Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
 
(j)             Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
 
(k)            Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
 
(l)             Remedies.  Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.
 
(m)           Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.
 
(n)           Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the holders of at least fifty percent (50%) of the Conversion Shares and Warrant Shares issued or issuable pursuant to the Notes and Warrants (each as defined in the Purchase Agreement).
 
(o)           Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
 
 
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(p)           Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
 
 
[SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.
 
Dated:  February 25, 2009
 
 
CLINICAL DATA, INC.
     
     
 
By:
 
   
Caesar J.  Belbel
   
Executive Vice President,
Chief Legal Officer and Secretary

 
Signature Page to Warrant No: A-1
 
 
 

 

NOTICE OF EXERCISE
 
TO: CLINICAL DATA, INC.
 
(1)       The undersigned hereby elects to purchase _____ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the Exercise Price in full, together with all applicable transfer taxes, if any.
 
(2)       Payment shall take the form of in lawful money of the United States.
 
(3)       Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:
 
 

 
The Warrant Shares shall be delivered to the following:
 
 

 

 

 
(4)      Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
 
[SIGNATURE OF HOLDER]
 
Name of Investing Entity:
   

Signature of Authorized Signatory of Investing Entity:
   

Name of Authorized Signatory:
   

Title of Authorized Signatory:
   

Date:
   

 
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ASSIGNMENT FORM
 
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
 
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
 
 
whose
address is
 
   
   
 
 
Dated:_________, _____

 
Holder’s Signature:
   
     
     

 
Signature Guaranteed:
   
 
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
 

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EX-99.1 4 ex99_1.htm EXHIBIT 99.1 ex99_1.htm

EXHIBIT 99.1

JOINT FILING AGREEMENT
 
In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the persons names below agree to the joint filing on behalf of each of them a Statement on Schedule 13D (including amendments thereto) with regard to the common stock of Clinical Data, Inc., and further agree that this Joint Filing Agreement be included as an exhibit to such joint filings.  In evidence thereof, the undersigned, being duly authorized, hereby execute this agreement as of the 27th day of February, 2009.

 
Date:  February 27, 2009
/s/ Randal J. Kirk
 
Randal J. Kirk
   
Date:  February 27, 2009
RJK, L.L.C.
     
 
By:
Third Security, LLC, its managing member
     
 
By:
/s/ Randal J. Kirk
   
Randal J. Kirk
   
Manager
     
Date:  February 27, 2009
KIRKFIELD, L.L.C.
     
 
By:
Third Security, LLC, its managing member
     
 
By:
/s/ Randal J. Kirk
   
Randal J. Kirk
   
Manager
     
Date:  February 27, 2009
NEW RIVER MANAGEMENT V, LP
     
 
By:
Third Security Capital Partners V, LLC, its general partner
     
 
By:
Third Security, LLC, its manager
     
 
By:
/s/ Randal J. Kirk
   
Randal J. Kirk
   
Manager
 
 

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